Crisis Management Chapter 12 Organizational and Managerial Communications Crisis Management Chapter 12 Peggy Simcic Brønn

Definition There are many definitions -- most agree that crises are characterized by surprise and a high threat to the operations of an organization. Should they be a surprise? Peggy Simcic Brønn

Medical analogy Bed rest Medication Chronic Fatal Peggy Simcic Brønn

Types of Corporate Crises

Examples -- Norwegian Examples? Public perception: Johnson & Johnson (Tylenol) Sudden Market Shift: Atari (computer games) Product Failure: A. H. Robins (Dalkin Shield) Management Succession: United Technologies Cash Crisis: Chrysler Corporation Industrial Relations Crisis: International Harvester Hostile Takeover: Bendix/Martin Marietta International Events: General Motors/OPEC Regulation/Deregulation: Braniff Peggy Simcic Brønn

News Coverage of Crises Increasing Business crisis events are increasing Sexual harassment -- increased 192% -- fastest growing category Class action suits, particularly against tobacco industry -- up 83% Automotive industry -- most crisis prone industry -- Banking #2 Commercial airlines close behind Peggy Simcic Brønn

Crisis Management Problem-sensing and diagnosis Decision response Resource mobilization and implementation Internal information flow External information flow Peggy Simcic Brønn

Proactive and Reactive Sides of Crisis Management Pauchant & Mitroff Peggy Simcic Brønn

Strategic Checklist Strategic actions Technical and structural actions Evaluation and diagnostic actions Communication actions Psychological and cultural actions Peggy Simcic Brønn

Crisis Management Group Leader Press spokesperson Employees/next of kin Authority liaison Technical and legal advisors Secretary Peggy Simcic Brønn

Common Reactions to Crises Denial or isolation Anger Bargaining for time Depression and grief Acceptance Peggy Simcic Brønn

Crisis Communication It is spontaneous. It is dependent on the size and nature of crisis. It is a ‘happening’. It needs other demands from management than ‘normal’ routines. It will normally affect many different stakeholders than planned communications. Peggy Simcic Brønn

When an accident, crisis or catastrophe happens, it is too late to develop a crisis information plan. A media plan and mental readiness must be in place before an accident, not developed during the accident. E. R. Sjøberg Peggy Simcic Brønn

Two Key Words Two Strategies Speed Confidence Information -- one-way spreading of facts and information Communications -- two-way method of giving out information Peggy Simcic Brønn

Effective communications may: Reduce risk of problem becoming greater Limit interference with normal operations Limit damage to corporate reputation Limit financial damage Peggy Simcic Brønn

Reality Many firms are not prepared for crises Many hire PR firms to ‘put out fires’ Very little proactive planning done Peggy Simcic Brønn

What affects reaction by others: Organizational behavior Conduct of management Research indicates that behavior of management key in recovery of firms Reaction of stakeholders Peggy Simcic Brønn

Be open, flexible and willing to accept responsibility Don’t claim to be perfect Initiate dialogue will all stakeholder groups Provide accurate, timely information to all targeted internal and external audiences Demonstrate concern for safety of lives Safeguard organizational facilities and assets Maintain a positive image of the organization as a good corporate or community citizen Peggy Simcic Brønn